House legislation aims to tighten regulations on scrap yards

Legislation under consideration by a House committee would tighten regulations on scrap yards and impose strict measures on ones that purchase stolen material from thieves.

The House Regulatory Reform Committee has been hearing testimony on measures that would build on what's already required under the 2009 Nonferrous Regulatory Act for scrap yards and require dealers to produce more detailed purchase transaction records.

The 2009 reform effort was the legislature's first attempt at cracking down on sales of stolen product.

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Rashida Tlaib, D-Detroit, who sits on the committee and sponsored one of the bills, said the package is a priority of Gov. Rick Snyder and would reduce the number of instances where stolen metal is sold in the state.

The National Insurance Crime Bureau issued a report in 2012 that ranked the Detroit-Livonia-Warren metro area fifth in large metropolitan areas for scrap metal insurance theft claims between 2009-11.

If passed, scrap yards would have to identify the employees who authorized the purchase, as well as the individual who delivered the product. If a different employee handled weighing the product or someone authorized the person to deliver the product being sold, their names would also be filed.

The committee heard testimony from members of the scrap yard business opposed to the package. In particular, an aspect in House Bill 4593 -- requiring photos be taken of the purchased metal, the delivery vehicle and the metal as it's being weighed -- was highly contested.

The bill would also prohibit the sale and purchase of personal property items, including public fixtures, new products used in manufacturing or construction, equipment or tools used by contractors, property clearly marked as belonging to someone other than the seller, cemetery-related items, or any material removed from property owned by a railroad company.

"It's our position that current law gives law enforcement ample tools in which to go after folks who are illegally recycling scrap metal," said Kelly Rossman-McKinney, spokesperson for Pontiac-based Ferrous Processing & Trading Company.

She added, "There are a number of practices in place that a number of scrap metal recyclers, including Ferrous, have in place and when they believe there is scrap metal being recycled that was taken illegally, they contact law enforcement immediately."

Another part of the proposed Scrap Metal Regulatory Act would implement a three-day waiting period for payment on items that are frequently stolen, such as catalytic converters, copper wire and air conditioners.

Dealers could only issue payment via check, money order or through an ATM card that can dispense cash on the dealer's premise, but an image of the transaction would be required.

The new law dictates that dealers who knowingly purchase stolen scrap metal would be charged with a felony that could result in up to five years of prison time or a $5,000 fine that would double for subsequent citations

Tlaib said representatives from the scrap yard business have a qualm with the delayed payment.

She contended the waiting period would clamp down on the frequency of sales involving the listed stolen items in the bill.

Mailing a check or money order would make tracking the money easier and "take away the attraction of instant cash," she said.

Oakland County officials expressed support for the measures.

"I think it will be very helpful," said Oakland County Sheriff Michael Bouchard. "It's a huge problem all over the state. But the devil is in the details for both the industry and law enforcement," referring to the logistics of implementing the legislation.

"Hopefully (the process) is easy for (dealers) to comply with and it's easy for us to act and inspect and participate in terms of ultimately doing what we all want ... which is to prevent legal things being stolen for the purposes of being scrapped."

Tlaib said she'd like to get a committee vote on the bill Tuesday, but Crawford doesn't anticipate one will take place on the three-bill package until the state Legislature returns from its summer recess.

"There have to be some things worked out on it," Crawford said, adding he doesn't believe it's insurmountable.

The panel is expected to hear more testimony when it meets again Tuesday.